Preamble

The House met at Eleven o'Clock

PRAYERS

[Mr. SPEAKER in the Chair]

NEW WRIT

For the County of Glamorgan (Ogmore Division), in the room of the Right Hon. Edward John Williams (Chiltern Hundreds)—[Mr. Whiteley.]

PRIVATE BUSINESS

NEWPORT (ISLE OF WIGHT) CORPORATION BILL

Lords Amendments considered, and agreed to.

NATIONAL INSURANCE [MONEY] (No. 2)

Considered in Committee under Standing Order No. 69.

[Major MILNER in the Chair]

Motion made, and Question proposed,
That for the purposes of any Act of the present Session to establish an extended system of national insurance providing pecuniary payments by way of unemployment benefit, sickness benefit, maternity benefit, retirement pension, widows' benefit, guardian's allowance and death grant, and to provide for the making of payments towards the cost of a national health service, it is expedient to authorise the payment out of moneys provided by Parliament of contributions towards the cost of benefit payable under the said Act and any other payments to be made out of the National Insurance Fund established thereunder, being contributions not exceeding in the aggregate sums computed in accordance with the following provisions, that is to say:ߞ
for each contribution as a self-employed person paid under the said Act by a person over the age of eighteen there may be paid the sum (hereinafter referred to as the."Exchequer supplement") in the case of a contribution paid by a man, of one shilling and one penny and, in the case of a contribution paid by a woman, of elevenpence:
Provided that, if the Treasury by order under the said Act made with a view to maintaining 

a stable level of employment, increase the rate of any contribution for which the Exchequer supplement is payable, they shall have power also to increase by the order the rate of the Exchequer supplement for that contribution, but in such manner as not to affect (except so far as appears to them to be expedient for convenience of calculation) the proportion which the rate of the supplement bears to that of the contribution."—(King's Recommendation signified.)—[Mr. James Griffiths.]

11.7 a.m.

The Minister of National Insurance (Mr. James Griffiths ): Perhaps I ought to say a word or two to the Committee about this new Financial Resolution. It is required in order to authorise the inclusion in the Bill of certain Amendments which I will propose on the Report stage. They will create payments out of the Exchequer by way of Exchequer supplements to the National Insurance Fund over and above those authorised by the original Financial Resolution to which the Committee has given its approval. I shall move Amendments to Clause II of the Bill, which are already on the Order Paper, to provide that self-employed persons shall be granted sickness benefit on the same terms as are already provided in the Bill for employed persons; that is, payment from the fourth day of incapacity or from the first day if the incapacity lasts 12 days. We had a long discussion on this in Committee. I promised to consider it and I have come to the conclusion that this is the right thing to do. I shall have more to say about the problems involved next week on the Report stage.
This will be an entirely new class who have not hitherto been covered by insurance unless they were voluntary contributors. There will be an initial period to pay contributions before they qualify for benefit. After that period, it is estimated by the Government Actuary that the cost will be about £3,250,000 a year. This new proposal involves an increase in the rate of contributions of 5d. per week for the self-employed man over 18 and 3d. a week for the self-employed woman over 18, with lesser contributions for boys and girls also in this class. It will involve a contribution of £1 million a year extra from the Exchequer. I do not think I need at this stage enter into the merits or demerits of the proposals, but I propose to say a great deal next week about the administrative problems involved. Therefore, I will content myself now by moving this further Financial


Resolution that will enable us to make the Amendment which I think will meet with approval in all sections of the Committee. I hope, therefore, that the Committee will approve it this morning.

11.11 a.m.

Mr. Sydney Silverman (): I would like to thank my right hon. Friend for moving this Financial Resolution in order to cover a point which gave a good deal of anxiety to many hon. Members, but I did not get up for that purpose. I got up to inquire of you, Major Milner, and of my right hon. Friend about a point concerning the joint effect of the two Money Resolutions. I regret not to have had the opportunity of giving notice of this, but I think it is a point I must raise. You will perhaps remember, Major Milner, that when Financial Resolution No. I was before the Committee and was agreed to, I raised certain questions as to whether it was so drawn as to permit of Amendments in Committee relating to the period of benefit of unemployment and of other matters. I also had on the Order Paper that day, after the Second Reading of this Bill and before the Financial Resolution, Motions to instruct the Committee that they should have power to amend the Bill in certain ways. Those Motions were held not to be necessary because the Financial Resolution was wide enough to cover them but, in order to be quite certain on the point, I raised the matter in the Debate on Financial Resolution No. I and received certain assurances from my right hon. Friend and from the Chancellor of the Exchequer. There was a general Debate and I think the right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler) was concerned in that discussion.
In Committee that undertaking was duly honoured except in one particular. When I say "except in one particular" I do not wish to be interpreted as implying any lack of good faith on the part of my right hon. Friend or any error of judgment on the part of the Chair, but one Amendment that I moved in pursuance of that undertaking was ruled out of Order by the Chair—I confess to you, Major Milner, quite correctly—on the ground that it was not covered by the Financial Resolution in spite of the understandings that have been reached. I think everybody felt that there had been

some kind of slip up and that an Amendment was out of Order which nobody in any part of the Committee, or the Chair either, had ever intended should be out of Order.
I hoped, therefore, that if my right hon. Friend had the opportunity, as he has this morning, of moving an additional Financial Resolution, he might have taken the opportunity of so drawing his Resolution as to cover that point. If he had done so it would not necessarily have committed him to accepting any such Amendment when it was moved, but it would have removed the feeling that an Amendment which everybody wanted to discuss had been excluded from discussion by inadvertence: Therefore, I would ask my right hon. Friend whether he has drawn Financial Resolution No. 2 in such a way as to cover that point also. If not, I think I am entitled to ask him why he did not do so. I do not think this is a matter of Order, but I think it affects the question as to whether the Committee ought to pass the Financial Resolution No. 2 in the form in which it is now before the Committee. We might have preferred it in another form and wide enough to enable such an Amendment that we wished to discuss to be moved and, if selected by the Chair, to be discussed on the Report stage. If, in his opinion, it does not, or if there is any doubt about it, would he consent to an Amendment now to enable such an Amendment to be moved on the Report stage with the permission of Mr. Speaker when the proper time comes?

The Chairman: The matter raised by the hon. Member for Nelson and Colne (Mr. Silverman) would appear to be one for the Minister and not for the Chair.

11.15 a.m.

Mr. R. A. Butler: I will not attempt to interfere between the hon. Member and the Minister upon this point. The hon. Member called me in aid, but I am afraid I shall not rise on this occasion. I sympathise with him to this extent, that any Money Resolution gives rise always to a certain amount of heated debate in this Committee and is usually misunderstood. As far as I understand the hon. Member, his desire is to extend the Money Resolution so as to cover an Amendment which he wants to move. If I agreed with his Amend-


ment, then I would support him, but I must honestly say that we have no Amendments on this side of the Committee that we want to move which necessitate a more widely drawn Money Resolution.

Mr. Silverman: Will the right hon. Gentleman allow me? When I invited him to support me in this, it was not with any intention of misleading him to support an Amendment giving more money to the unemployed. I know he would never want to do that, and would not have the support of his party if he did. What I thought he might have given me some support in doing, especially in view of the recent discussions on Financial Resolutions in Committee, was in having them so drawn that important questions might be discussed and decided, whichever side of those questions the different sides of the Committee supported. I would have invited him to support me in enabling questions to be discussed so that his party's opposition to extended unemployment benefit could be suitably recorded in the Lobby and on the records of the House.

Mr. Butler: I am afraid I am still not to be drawn even on that point. Normally I would have supported the hon. Gentleman if I had thought it necessary, but it so happened that after our experience on the original Money Resolution, we were satisfied that we had complete liberty in Committee to take what action we desired, and this is, I think, the only major case in which it is necessary for the Government to place a new Money Resolution on the Paper.
I have certain observations to make upon this, which is a very important concession made by the Government in view of the representations made particularly from this side of the Committee, although there were others who have supported this on all sides, upstairs and originally. We have made a special point of trying to help the self-employed man and we have always drawn attention to the great inequity which the self-employed man and woman suffer owing to the fact that they have a very long waiting period. In the original Debate the Parliamentary Secretary set out with great clarity all the difficulties in the way of granting this concession, and if hon. Gentlemen will study HANSARD on this matter in columns 2011

and 2012 of 8th February last, they will see that the hon. Gentleman had an even more difficult passage on this matter than he had on other matters, that he was continually interrupted in a friendly but persistent manner asking him whether he could not make some concession. On that occasion, in answer to the hon. Member for Hornsey (Mr. Gammans) and others, the hon. Gentleman said that he thought it might be possible to make a concession on this point. We then discussed it at great length upstairs, and the result is that the Government have seen wisdom.
We would like to thank the Government for accepting suggestions put forward from this side of the Committee. The Government are learning every day and they are making their Bill better and better. We have been very glad to fulfil the undertaking which we gave originally that the Opposition would take a constructive view of the National Insurance Bill as a whole, and would attempt to make it a better Bill, and the country will be grateful to us for the constructive part we have taken in moving the Government at last to a rather wiser course than they might previously have adopted.
However, there are certain important points to raise upon this. I agree, Major Milner—and I am sure I shall have your aid in this matter—that most of them would be more suitably raised on the Report stage next week, but the fact is that we are asked in Parliament to grant an extra —1 million of public money for the purpose of helping the self-employed in the Exchequer supplement. Hitherto the self-employed have been treated very hardly in the matter of Exchequer supplement. I raised this matter in my Second Reading speech and said:
It is also the case that the self-employed man, with the Exchequer supplement, has to contribute towards unemployment benefit to the extent of 50 per cent., whereas in the case of other benefits it is to the extent of 20 per cent. of the contributions. The self-employed man gets no unemployment benefit, and to that extent he does not share in the Exchequer supplement provided for other sections of the population. [OFFICIAL REPORT, 6th February, 1946; Vol. 418, c. 1772.]
That is only one instance of the manner in which the self-employed man has been hardly treated in the matter of Exchequer supplement. I think the Committee is doing justice today in raising the contribution from the Exchequer to the self-


employed man. We are trying in some ways to redress the balance. The matter is not so simple as that of merely voting an extra £1 million of public money. This scheme does not depend on public money alone. As a result of our actions and decisions today, the self-employed man and woman will have to pay a very considerable extra contribution. It is very important for the Committee and the country, as the Minister said in his opening remarks, for these figures to be fully understood by the self-employed person. The Minister's original concession was calculated, if the waiting period were reduced to the similar waiting period for the other people in the Bill, to be an extra contribution of 4½d. a week, which, added to 5s. 9d., amounted to 6s. 1½d. The position now is, worse, because under the Minister's suggestion the self-employed man will have to pay 6s. 2d. That is an extra 5d. instead of the 4½d. originally forecast by the Minister and the Parliamentary Secretary. This flows from the decision of the Government to put this Money Resolution on the Order Paper.
I should value an explanation of how in this period of time the amount has risen from 4½d. to 5d. I can, if the Minister does not feel inclined to answer, give some idea of the answer myself. I will proceed to do so. The position is not simple. The adult man under the concession of the Government, would have to pay an extra 5d., the adult woman an extra 3d. the boy under 18 an extra 3d., and the girl an extra 2d. The Exchequer contribution is increased by 1d. for adults and nothing for young persons. No doubt an absolutely exact apportionment of the cost is not possible where such small amounts are concerned, and on the whole the Minister seems to have done rough justice in the decision he has taken. I have calculated that the number of self-employed men is about three times the number of self-employed women. I do not know if the Minister can corroborate that fact. The average additional contribution amounts roughly to about 4½d. in the contribution the Minister originally suggested. That is the average contribution taken all over, after considering the facts I have stated.
The Committee's attention should be drawn to another aspect of the case. As I see it, the Minister's extra ½d. on the contribution is largely due to the fact that he has not been content only with doing away with the waiting period and restrict-

ing it to the three days, but has to give to the self-employed the same concession about the linking up of days of unemployment over a 12 week period. That is a matter which will be more suitably discussed on the Report stage, but there is no doubt that while that concession is welcomed because it puts the self-employed on exactly the same basis as the others, at the same time it makes the administration of the scheme extremely complicated. The linking up periods are complicated enough for other persons, but for the self-employed—if one reads the massive evidence of Sir William Beveridge and the definite conclusions in paragraph 75 of the Coalition White Paper, which described the administrative difficulties of doing away with the waiting period—one finds all the evidence goes to show that the administration of sickness benefit to the self-employed person without a long waiting period is something which the Government machine up to this date has never been willing to envisage.
On the Report stage we shall want to hear from the Minister how he proposes to make this Bill work. This Bill is going to depend as much on good and efficient administration as upon anything else. It is through good and efficient administration that the people are going to retain confidence. We shall therefore want to hear—perhaps the Minister and his Parliamentary Secretary may prefer to delay this until next week—how far this is administratively possible. If we concede this I million today we shall want to know how the linking up period works in the case of the self-employed person; the position of the self-employed is very particular. There is the vast organisation of the retail traders who have put evidence before the Minister. They represent some 1,000,000 of the self-employed persons. But there are 1,500,000 or so more self-employed persons who are small men and who work, for example, in the country districts and have remote habitations.

Mr. S. Silverman: On a point of Order. It is perfectly obvious that everything the right hon. Gentleman is saying now will have to be said again when the Minister moves his Amendment, if he ever does move his Amendment. This cannot have anything to do with the question of the Financial Resolution enabling him to move the Amendment.

The Chairman: I thought the right hon. Gentleman was going rather wide, but he did drag in "self-employed persons" at appropriate intervals, and I therefore assume that he is endeavouring to keep to the Rules of Order.

Mr. Butler: I must accept your description of my speech as "dragging in" I am always submissive to the Rules of the Chair, however much I may be wounded by them sometimes. I hope to illustrate that my argument is flowing logically from the fact that we are about to vote £1 million of public money, and the consequences of this decision are very considerable. However, I would not wish to deprive the House on the Report stage of the full wisdom I should like to put before it, and will, to the extent that you desire me, curtail my remarks and make them all the more expansive and, I hope, in better form, on the next occasion.
I was illustrating the fact that the self-employed are of many different types and it will eventually be much more difficult to operate the scheme for certain types than for others who are represented in the big organisation with which the Minister has been in touch. As far as I know from contact with that organisation of self-employed persons, they desire to pay the extra contribution which flows from the decision we take today. To a large extent, we are aware of the fact that these self-employed persons, numbering about 1,000,000 out of 2,500,000, are ready to accept the decision of the Government. It would be very valuable if we could have further evidence on the next occasion of the views of the other more lonely, more isolated, self-employed persons, many of whom have small means, as to whether they will be equally grateful to us for asking them in return for the Exchequer supplement we are voting today to pay these extra contributions imposed upon them. This point flows absolutely logically from the decision we are taking today and perhaps on this, or a future occasion, the Minister can give some evidence in regard to it.
Those are the points which I wanted to make about this Money Resolution. If I may sum up, I think it does justice to the self-employed man because it gives him a greater share of the Exchequer contribution than he got before. Before, I think

he was badly treated. In the second place, I think it does away with an anomaly that the self-employed man was not doing nearly so well out of this scheme and he now gets a great deal better benefit if he is sick. Therefore, this scheme is more worthwhile for him. The last point is that I hope the Minister, when we get to the details of this, will explain the impact of it upon not only those represented in a large organisation but the other types of self-employed. It is indeed fortunate that the Opposition contributions to these Debates have been so enlightened and that we have been able to help a section of the population who have always looked to us for succour and help in their need.

11.32 a.m.

Major Leǵǵe-Bourke (): I rise to support what has been said by the right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler). We on this side of the Committee have done our best to protect the interest of the self-employed. It must have been clear to all hon. Members that the self-employed were far from being satisfied with the original provisions of the Bill. As my right hon. Friend has said, there are still some self-employed who will feel that this increase is rather beyond their means. I hope that by the time we reach the Report stage the Minister will, at least, have produced some figures to show the various proportions of the self-employed who live in remote districts and those who live in more populated districts, and also those who are voluntary contributors under the present scheme. I have previously asked the Minister a question to that effect which he was unable to answer. I hope, now that some time has elapsed, he will be able to give me a reply. A further point is that it seems to me that the most important sentence in the Financial Resolution is contained in lines 16 and 17. It includes the words:

…the said Act made with a view to maintaining a stable level of employment…
I wonder very much whether the right hon. Gentleman is not perhaps missing a golden opportunity to cover the various interests affected in Clause 20, Subsections (4) and (5). I believe that, particularly in Subsection (5), there are some people who will get a great deal of benefit to the great chagrin of others who will not. I think that will upset the future labour


problem a great deal. In this Financial Resolution we have a proviso which says:
…if the Treasury by order under the said Act made with a view to maintaining a stable level of employment, increase the rate of any contribution…
If that is the case I should like to see the right hon. Gentleman perhaps putting the figure a little higher to meet the great need for old people to carry on working at present. I hope that by the Report stage of this Bill we shall have some further information from the Government to show what they propose to do in order to encourage old people to carry on working. I do not think Clause 20 of the Bill is satisfactory. I welcome this decision by the Minister, but I ask him very seriously to consider before the Report stage whether or not he should make this compulsory, and whether or not he should leave it open to some of the self-employed to opt out altogether or perhaps to remain on the original rates proposed under the Bill.

Mr. Leslie (): I am very glad indeed that this concession has been made to self-employed persons. I am particularly interested in this matter so far as it concerns small traders. We have to take into consideration the fact that a large number of ex-Service men on their return to civil life have become self-employed persons.

11.36 a.m.

Mr. J. Griffiths: In the few remarks I made at the beginning, I contented myself with moving the Financial Resolution and saying only a word or two about it. I am sure Members of the Committee will realise that in confining myself to the narrow financial aspect for the moment I was not in any way seeking to indicate that this was an unimportant problem with unimportant consequences. I was reserving what I shall have to say—and I shall have a good deal to say—for the Report stage. The right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler) did the Government a great service. He paid us a great compliment when he said the Government are learning every day. That distinguishes us from previous Governments I have seen in this House. Other Governments never learned anything. I am proud to belong to the first Government who carry on learning every day. Not only are we learning but we are getting stronger every day. Efforts

have been made to make into a party question what is to be done in this Bill and other Measures for the self-employed who are sometimes referred to as the "little men." I have not looked upon this as a party question.
Serious administrative problems are involved in this matter and I shall discuss them next week. No one knows this better than the right hon. Member for Saffron Walden. I am glad to be the first Minister to do something more than praise the "little men"; I am glad to be the first to help them. We are giving them tangible benefits, though in giving these benefits we face very serious administrative problems. I know the figure appears very high. I have had to bear that in mind. I have met representative organisations. I invited every hon. Member in this House to write to me or to see me and to tell me what the unorganised self-employed persons thought about this. I have done my very best to find out. As a result, I have come to the conclusion that in this scheme, for the sake of the unity of the scheme, as well as the self-employed themselves, the right thing was to put everybody on the same level. On more than one occasion there have been suggestions that the self-employed are getting a raw deal out of this. I have met representatives of the self-employed. They are very thankful for this scheme. It is the first one that brings them within the scope of National Health Insurance benefits. They are not getting a raw deal.
One of the reasons why I have put them on the same terms as everybody else is because they wanted to be on the same scale. I have explained before—this is a financial point—that the self-employed are covered for all the benefits except unemployment benefit. The Exchequer makes a contribution of exactly the same proportion towards the benefits to the self-employed as they do towards the benefits of the employed. The reason for what appears on the surface to be a difference is one which I have explained before. There is one benefit, the benefit for unemployment, for which, for obvious reasons, the self-employed are not covered. The cost of unemployment benefit is distributed between the contributors and the State so that one-third is paid by the worker, one-third by the employer and one-third by the State. That has always been the


case and I thought it was desirable that that should be continued in the new Bill. For all the other benefits, sickness, retirement pension, and so on, the proportion paid by the State towards the self-employed man's benefit is exactly the same as the proportion paid by the State towards the benefit of the employed person. I hope that clears up the matter.
One further point. The Parliamentary Secretary indicated that the contribution was in the region of 6s. 1½d. Actually, the actuarial contribution under the provisions now before the Committee is 5s. 9.2d. If, therefore, we add what is required to meet these contributions, it will cost 6s. 2d. per week. I know that is a high contribution. I think I have dealt with most of the point raised, and, if there are any others, they must await the discussion we shall have next week, in which I will indicate the administrative steps we propose to take on what is a most important problem, that is, checking up on claims.
The hon. Member for Nelson and Colne (Mr. S. Silverman) referred to the discussion we had earlier on in connection with the first Financial Resolution and to questions which he addressed to myself, the Chancellor of the Exchequer and the Chair. On the Committee stage which followed, the hon. Member will recollect, an Amendment to Clause 12 was moved in the form of extending the period beyond 180 days, I think, to three years. That was accepted as being in order by the chair and was debated, though I forget whether it was voted upon.
The Amendment that was out of order was one moved by the hon. Member for Nelson and Colne to delete the period of five years from Clause 62. I indicated to the Committee that, when we discussed this matter—and it will be discussed again next week—the Government had decided, as a matter of policy, to make this provision in Clause 62 for five years. I indicated, at the same time, that there was a provision in the Bill by which, before that period ended, the Government could review the whole situation. I indicated what our policy was, and said that we wanted the House to accept the Bill as it was, get it to work and see how the provisions of Clauses 12 and 62 had worked out. We would then bring our recommendations to the House, and would


review and examine the matter at that time. The view of the Government is exactly the same now as then. With regard to the other Amendment, it was accepted by the Chair and there was a Debate on the question of the limit to unemployment benefit. Speaking for the Government, I say that that is our intention, and I ask that the Resolution shall be passed.

11.42 a.m.

Mr. S. Silverman: I hope my right hon. Friend will not mind if I press him further upon this. I think we all appreciate that what distinguishes this Government from others is that they learn from day to day, and that is what encourages those of us who are anxious to continue their education. The point involved is really quite simple, and I do not want the Minister to say a word to prejudice the Government's policy or tie their hands when the time comes to discuss the merits of the proposal. I am not discussing the merits of the proposal at all; I am talking about the question whether the proposal, and its merits or demerits, can ever be discussed at all. Clause 12 prescribes a limit beyond which unemployment benefit cannot be paid. Clause 62 gives the Minister the discretion—not the right, but the discretion—to continue payments beyond that period. The point was whether, if the right hon. Gentleman is to have discretion to continue benefits to people who are still unemployed but who cannot get benefit, there, is any reason why that should be limited to five years. We were assured by the Minister, the Chancellor of the Exchequer and the Chair that such an Amendment would be in Order. When we came to Financial Resolution No. 2, we understood that it would have been possible to include words in the Resolution that would have enabled the merits of that proposal, on a very important aspect of all-inclusive comprehensive insurance, to be discussed. It does not do that. and, if the Chair maintains the Ruling in Committee, which differs from the Ruling given on the Floor of the House, that question can never be discussed at all.

Mr. Griffiths: I do not blame the hon. Member for this, but he did not give me notice that he was going to raise it, and I have not looked up the report of the Debate in Committee. I do not


think it concerns Clause 62 so much. The actual point was whether it would be in order, on the Committee stage, to move an Amendment to Clause 12, and, after consultation with the Chancellor of the Exchequer, I said that it would be in order and I was right. It was in order, and it was moved, but I do not think that I gave any kind of undertaking, because the hon. Member will recollect that it was the Chancellor who answered this point in the Debate. I do not think it was the point concerning the five years which was at issue, but whether it was desired to move such an Amendment in Committee.

Mr. Silverman: My right hon. Friend is accurate, so far as he goes, but the matter goes further than that. The point was that he should have power to extend the period and the effect of that on subsequent Amendments. Obviously, if we extend the period of 180 days in Clause 12, that involves consequences in Clause 62.
Question put, and agreed to
Resolved:
That for the purposes of any Act of the present Session to establish an extended system of national insurance providing pecuniary payments by way of unemployment benefit, sickness benefit, maternity benefit, retirement pension, widows' benefit, guardian's allowance and death grant, and to provide for the making of payments towards the cost of a national health service, it is expedient to authorise the payment out of moneys provided by Parliament of contributions towards the cost of benefit payable under the said Act and any other payments to be made out of the National Insurance Fund established thereunder, being contributions not exceeding in the aggregate sums computed in accordance with the following provisions, that is to say:—
for each contribution as a self-employed person paid under the said Act by a person over the age of eighteen there may be paid the sum (hereinafter referred to as the Exchequer supplement') in the case of a contribution paid by a man, of one shilling and one penny and, in the case of a contribution paid by a woman, of elevenpence:
Provided that, if the Treasury by order under the said Act may with a view to maintaining a stable level of employment, increase the rate of any contribution for which the Exchequer supplement is payable, they shall have power also to increase by the order the rate of the Exchequer supplement for that contribution, but in such manner as not to affect (except so far as appears to them to be expedient for convenience of calculation) the proportion which the rate of the supplement bears to that of the contribution.
Resolution to be reported upon Monday next.

Orders of the Day — INDIA AND BURMA (BURMA MONETARY ARRANGEMENTS)

Order read for resuming Adjourned Debate on Question [9th May]:
That an humble Address be presented to His Majesty in pursuance of the provisions of Section 157 of the Government of Burma Act, 1935, praying that the India and Burma (Burma Monetary Arrangements) (Amendment) Order, 1946, be made in the form of the draft laid before Parliament.

Question again proposed.

11.48 a.m.

The Under-Secretary of State for India (): The House knows that, since the separation of Burma from India in 1937, all matters of currency have been regulated by the India and Burma (Monetary Arrangements) Order, 1937, which the right hon. Gentleman opposite was responsible for having approved by the House. Under this Order, the Reserve Bank of India manages the currency of the country and is the banker to the Government. The purpose of this Draft Order is to transfer, for the period referred to in paragraph 3 of the Draft Order, responsibility for the management of the currency of the country from the Reserve Bank of India to the Governor of Burma, and thereby to enable him to regularise the currency as it now exists.
This transfer has become necessary because, in the view of the authorities concerned—the Government of Burma, the Government of India and the Federal Reserve Bank of India—conditions in Burma at present are such as not to permit the Reserve Bank to resume the full scope of its responsibilities and functions under the 1937 Order. The Reserve Bank will, however, continue to act as agent of the Government of Burma in all currency matters and as banker to the Government itself. I hope that, unless the right hon. Gentleman opposite has any point which he would like to address to me, what I have said is a sufficient explanation.

11.50 a.m.

Mr. R. A. Butler (): The purpose of this draft Order, as has been explained in a lucid manner by the Under-Secretary for India, is to transfer the responsibility for the management of


the currency of Burma from the Reserve Bank of India to the Governor of Burma, the Reserve Bank thereafter acting as agent for the Governor. I was not, however, quite clear about the exact relationship of the Governor of Burma to his agent in this matter. The hon. and learned Gentleman was quite right in saying that I was originally responsible, after the passage of the India Act, for the original Order of 1937. Under that Order of course the Reserve Bank of India was regarded as managing the currency of Burma and being banker to the Government. Can we first of all have any explanation as to what the exact relationship will be now, and whether there is any alteration in the conception laid down in the original Order? Normally, it is satisfactory to both that the Reserve Bank should carry out the day to day management of these complicated affairs, and I presume that the Governor himself will not have to occupy himself with them.
The second point arises on Paragraph 5 of the Order, which is not very easy to understand without a certain amount of explanation. Burma, as we all know, has been through a very exceptional period and, at the time of evacuation, a considerable number of unissued stocks of notes were looted from the treasuries, and I understand that the Reserve Bank of India holds assets only against notes which are in circulation and not against unissued stocks. Would the hon. and learned Gentleman explain what is the position and the responsibility of the Reserve Bank in regard to looted notes? I should be grateful for an answer, for, as I understand it, the Reserve Bank must be protected, and therefore the Governor of Burma, whose agent will be the Reserve Bank, has to assume responsibility for all Burma notes, including the looted ones.
The next question that strikes me on reading Paragraph 5 of the Order is why there should be a reference to Indian notes of the denominations of Rupees 1,000 and Rupees 10,000. The expression here is:
shall, with the exception of notes of Rupees 1,000 and Rupees 10,000 denomination continue to be legal tender in Burma.
It is not, of course, normal for many of us to deal with notes of such a very high value, but I would like to know whether there is any other explanation. As I

understand it, this Measure is being carried out in order to deal with persons who amassed high value notes by illegal methods during the occupation period. I should like to be assured that such practices are in fact not likely to continue. If they are likely to continue, have those words been put in the Order to prevent such practices? Is it necessary for the Government of Burma, in view of the danger of such amassing of notes, merely to include those notes of high value, since if there is a danger of such malpractices how can they be prevented from happening with notes of different denominations? Those are the main questions I should like to put to the hon. and learned Gentleman, because the House must see that, in view of the extreme strain to which Burma has been subjected, it is necessary to make arrangements of this sort to deal with the exceptional situation.
The only other question is about Paragraph 6. I understand that there is a great mixture of currency media in Burma at the present time, and I presume that the terms of Paragraph 6 are designed to deal with the complicated position which exists and to carry out Paragraph 14. of the principal Order which was introduced in 1937, since the Reserve Bank will have the right to buy or sell at par unlimited amounts of Burma currency from or to the Government of Burma. These are the main questions which I think will come into the minds of those present this morning and they all concern subjects upon which we are very keen to hear the hon. and learned Gentleman give a reply. I thought it was my duty to raise them owing to the great interest they have evoked, and we should like to have a further explanation.

11.55 a.m.

Viscount Hinchingbrooke (): I do not want to jump the hon. and learned Gentleman out of the realm of cautious constitutional advance indicated in the Order which we are now considering into a wild world of speculation resulting from the drastic changes which the Government are proposing in India, but I think we might have just a word from him about what is likely to happen to these currency provisions in Burma in the event of the Indian Reserve Bank passing under a new Government of India which elects to leave the British Empire. Burma is by no means yet in that position; it is not yet a Dominion,


and nobody contemplates its leaving the British Empire. Will it not be necessary for some Commonwealth bank, the Bank of England or a new Reserve Bank of Burma in relation to the central Government at home, to back the Burma currency in the event that the Indian Reserve Bank can no longer provide the facilities because of the fact that India elects to leave the British Empire? I should like the hon. Gentleman to say whether any arrangements are in contemplation to cover this eventuality. Nothing could be worse, from the point of view of the relations between Burma and this country and that the Burma currency should be backed by an Indian Reserve Bank which was responsible to an Indian Government that had elected to leave the British Empire altogether.

11.57 a.m.

Mr. A. Henderson: The right hon. Gentleman addressed a number of questions to me, the first of which was, Is the Governor of Burma himself to be concerned with the day to day administration of currency matters? The Governor of Burma has a financial adviser and, subject to his advice, he will be responsible for financial policy, but the day to day administration, as far as the banking aspect is concerned, will be in the hands of the Federal Reserve Bank of India. The noble Lord asked what the position would be in the hypothetical event of the new India desiring to be outside the Commonwealth. I can say that, apart altogether from that consideration, the question of the future relationship of the Federal Reserve Bank of India to the Government of Burma is under consideration, but that is quite apart from what the position would be in the event of India seeking to leave the Commonwealth.

Mr. R. A. Butler: Would there have to be a revision of the Order, or would the Order have lapsed?

Mr. A. Henderson: In any event, this Order is an amending Order, and its scope and duration are temporary. As the right hon. Gentleman knows, it is only to cover the period ending 30th September, and it will be necessary to come to the House, probably before the Recess, in order to deal with the more permanent aspect of the situation. With regard to looted notes, Paragraph 5 is designed to transfer to the Governor the liability for

all the notes that were looted during the early days of the Japanese occupation. At the same time, the paragraph does provide that the assets in respect of those notes now held by the Government of India shall be transferred to the Government of Burma. As regards the large notes, those of 1,000 and 10,000 denomination, it is, as the Order indicates, the fact that those notes are not to be regarded as legal tender. That, of course, does not mean that they will not be legal; but it will mean in practice that the onus will be put upon those who have them in their possession to establish that they came into their possession by lawful means. I think that that is a very necessary provision, having regard to the facts of the situation.

The right hon. Gentleman: asked whether paragraph 14 of the 1937 Order would be affected by the provisions of paragraph (6). Paragraph (6) ensures the continuance of unrestricted remittance facilities at a fixed rate of exchange between India and Burma, and for the same exchange link with sterling in Burma as obtains in India, by providing that the Reserve Bank of India is to have the right to buy or sell unlimited amounts of Burma currency from or to the Governor at the value laid down in the paragraph—one Burma rupee to be equal to one Indian rupee. I hope that these answers cover the points raised by the right hon. Gentleman.

Mr. R. A. Butler: As I understand it, this Order expires on 30th September, 1946, and, therefore, it will be necessary for him to come to the House again before the end of the Session. If that is so, I should like to ask why the Government want this Order to job backwards to 16th October, 1945, and why they did not come with this Order before—why the hon. and learned Gentleman has to come before the House again as he always has to do; for I sympathise with him in his having to come with these difficult Orders before the House. I should like to ask why earlier provision could not be made to last longer, so that he would not have to trouble Parliament with this matter again.

Mr. Henderson: The reason why it will be necessary to come back to the House, possibly towards the end of July, is that the long term policy has not yet been settled. The whole question of the relationship of the Federal Reserve Bank


of India and the Government of Burma, the question of the control of currency, has been under active discussion for some months, and no final decision has yet been arrived at by the various authorities concerned. The reason why the draft Order itself dates back to 16th October, is, of course, that that is the date on which the Governor returned to the country after the occupation; and because the difficulties with which the Government of India have been faced are very considerable—the right hon. Gentleman is well aware of the difficulties—it was not possible to deal with this matter earlier than we have done. The Governor has had great difficulty; and it was only in the light of the experiences they have had in Burma that it was decided that the position had to be regularised. The form of regularisation is in the provisions of this Order, by transferring the control and management of the currency from the Federal Bank to the Government. I can assure the right hon. Gentleman there has been no unnecessary delay. It is really that we have been bound by the circumstances of the position.

Mr. Butler: Can the hon. and learned Gentleman give the assurance that it was not due to a lack of a legislative programme that the Government did not bring this before us sooner?
Question put, and agreed to.
Resolved:
That an humble Address be presented to His Majesty in pursuance of the provisions of Section 157 of the Government of Burma Act, 1935, praying that the India and Burma (Burma Monetary Arrangements) (Amendment) Order, 1946, be made in the form of the draft laid before Parliament.

To be presented by Privy Counsellors or Members of His Majesty Household.

Orders of the Day — RAILWAYS (VALUATION FOR RATING) BILL

Order for Second Reading read.

12.6 p.m.

The Parliamentary Secretary to the Ministry of Health (Mr. Key ): I beg to move, "That the Bill be now read a Second time."
I wish as shortly and as simply as I can to make plain the Bill's purpose.

Before the passing of the Railways (Valuation for Rating) Act, 1930, there had been considerable dissatisfaction with the method of deciding the assessment for rating purposes of the railway undertakings; which assessment, up to that date, was of a very parochial character. What had to be done was to attempt to ascertain separately as a basis of valuation what rent would be paid by our old familiar friend "the hypothetical tenant" for each particular hereditament in each individual rating authority area, and the Act of 1930 really introduced for the railways a national instead of a parochial valuation.
Railways, like most public utility undertakings, are valued on the profit or revenue principle, under which the annual value of the undertaking is deduced from the annual profits or net receipts which are earned. The Act of 1930, therefore, provides for four stages in this valuation process. First, there has to be an ascertainment of the average annual net receipts of each of the four main line railway companies. Second, there is the determination of the net annual value of each company undertaking as a means of arriving at the rent which a hypothetical tenant would pay for the undertaking as a whole. Third, there is the apportionment of the net annual value so obtained amongst the separate railway hereditaments occupied by each company in each separate rating authority area. Last, the calculation from this apportionment of the annual value and the rateable value of each hereditament. The net receipts of the railway companies for these purposes are obtained over a period of five years; and the results so obtained are made the basis of the valuation of the railways for a subsequent period of five years. Thus, the average annual net receipts for the period 1940 to 1944 form the basis of the net annual value and thus of the rateable values for the years 1946 to 1951 for England and Wales and for 1948 to 1953 for Scotland.
The work of ascertaining these particulars, and of recording them in the railway valuation roll, for the railways operating in England and Wales, is done by the Railway Assessment Authority; and for the railways operating in Scotland, by the Assessor of Railways and Canals. But because the London Midland and Scottish Railway and the London and North


Eastern Railway operate partly in England and partly in Scotland the Act of 1930 set up an Anglo-Scottish Railway Assessment Authority which was charged with the function of apportioning the net annual receipts between the parts of the two railways operating in the two countries.
This Bill is made necessary because the conditions governing railway operations in the quinquennial period 1940–44, upon which particulars the next valuation roll is to be based, make it impossible for the Railway Assessment Authority accurately to determine the net receipts of the individual companies in those years. The railways were taken under Government control, and the usual clearing house activities of the railway companies were largely suspended. Even if the net annual receipts could be ascertained for that period, it would be difficult, if not impossible, to calculate the hypothetical rent for the five years 1946–51 from the net annual values resulting from the abnormal conditions of 1940–44. The earnings of a particular railway in the war years would not give a fair indication of the likely earnings of that undertaking in the next five years, and, therefore, any valuation based upon such uncertainties would certainly not be a fair one.
After very careful consideration, we decided that there was no alternative to that of arbitrarily determining the notional net receipts of the war years for each undertaking for valuation purposes. During the period 1940–44, the average annual pooled receipts of all the railways was, in round figures, £79 million. From this pool, £43 milion was paid to the railway companies, and it is that figure. with minor adjustments, which has been taken as the average net receipts for the undertakings for the purposes of the operation of the Act of 1930.
In order that the machinery of that Act may work, this figure had to be apportioned between the various undertakings. That was done, and the resultant figures were accepted by the interested parties concerned, the railway companies and the local authority associations. From that, a further step had to be taken, because it was really impossible to calculate from these figures the rent of the hypothetical tenant. We had to go further and determine the net annual value of each undertaking, and thus leave the Railway Assessment Authority and the Assessor of Rail-

ways and Canals the comparatively straightforward task of determining from that general figure the net annual value, and hence the rateable value of each of the separate railway hereditaments.
The lines upon which we worked this were roughly these: It was found that the proportion in which the £43 million had been divided between the undertakings in 1940–44 represented an increase of 12.7 per cent. on the net receipts for each of the undertakings actually ascertained for the years 1935–39 that formed the basis of the valuation roll of 1941–46. We, therefore, thought that it would be appropriate to take the annual value of each railway for 1941–46, the current roll, and increase that suitably by a common percentage in order to give figures for the valuation roll for 1946–51. These figures were worked out in discussion with the local authority associations, which consulted the railway companies on the matter, and the resultant figures are set out in Part I and Part II of the First Schedule to this Bill. They represent an increase of 14.1 per cent. over the figures of the previous period. On the basis of those figures, the Railway Assessment Authority will proceed to work out a draft valuation roll, and the machinery of 1930 will thus operate normally—by that, I mean that representations and objection to that draft roll can be made in the usual way; appeals can be made to the courts as to the correctness of the roll in relation to any particular hereditament, and so forth. There will, however, be no opportunity to challenge the main figures of net annual values which this Bill contains and makes fixed and final.
Clause I (3) deals with the expenses of the Anglo-Scottish Railway Assessment Authority or the joint Authority as it is designated in the Subsection. By Part II of the Second Schedule to the Act of 1930, the expenses of the Joint Authority are to be apportioned between England and Scotland in the proportion in which the aggregate net receipts of the undertaking, common to the two countries, bear to one another. Part III of the First Schedule to this Bill gives the distribution of the notional net receipts of the two undertakings for the purpose of arriving at the expense for this fourth quinquennial period. The figures, therefore, set out, have been accepted by the railway companies and by the local authorities. Clause I (4), together with the Second


Schedule to the Bill, deals with modifications of the principal Act, which are consequent upon the changes which I have already indicated.
I desire to give a short explanation of Clause 2. This Clause makes a minor alteration in the Act of 1930 to cure a defect disclosed in the case of the Southern Railway v. the Worthing Corporation in 1943. Briefly stated, the defect was this: A property may during one quinquennial period cease to be a railway hereditament, and, therefore, will not be included in the next railway valuation roll. But because of the amount of time which has to be taken up in calculations, investigations, and so on, there may be a period between the end of one quinquennial period and the completion of the valuation roll for the succeeding period. Local authorities are not able to bring into ordinary rating properties which have ceased to be railway hereditaments until the new roll has been produced, and it can be proved that the particular property is omitted from that new roll In other words, the decision in the Worthing case was really that the old valuation roll remains in existence until the new one is completed. This can lead to a loss of rates by rating authorities inasmuch as there is a period during which no rates can be raised on the particular hereditament that has ceased to be a railway hereditament. A promise was given by the Coalition Government last year that this matter should be put right in the period of the fourth railway valuation roll period, 1946–51, and the wording of Clause 2 has been introduced in agreement with a conference of local authorities, and I understand that the railway companies have accepted the principle laid down.
Lastly, there is Clause 3 which applies, with the necessary modifications, the provisions of the Bill to the London Passenger Transport Board. This is necessary to be done because the Act of 1930 does not apply directly to that Board, but was applied to it with modifications and adaptations by an Order of the Minister confirming the scheme made for the purpose by the Railway Assessment Authority in exercise of the powers that were given to him by Section 92 (3) of the Passenger Transport Act, 1933. I hope that these explanations will be

helpful to the House, and that we now can secure the Second reading of the Bill.

12.22 p.m.

Captain Crookshank: Judging by what has happened so far in this Parliament there will be comparatively few occasions on which I shall be able to congratulate a Minister on anything, especially Ministers in the Health Department. But on this occasion, I must thank the Minister and congratulate him on the most admirable way in which he has explained this frightfully technical matter. I am personally indebted to him for the way he has put it, and I am sure it anyone wants to know anything about this obscure subject he has only to read that speech to be fully informed of the purpose of this Bill. I must congratulate him most heartily. For our part we do not propose to offer any opposition to this Bill, more particularly because it is going to a Select Committee. Therefore, any of the more detailed arguments necessary to make sure that it is completely fair all round will be before the representatives of the House on that Committee, whose report, no doubt, we will await with interest.
It seems to me from such inquiries that I have been able to make in this matter that the real difficulty is that under the Act of 1930 these valuations called cumulo valuations—a delightful word whatever it really means—have to be rated on the basis of the previous five years' workings of the undertakings. Owing to the war and the fact that there was a railway agreement which limited what the railways themselves got, whatever might be the gross total, the Government taking the balance, there was some difference of opinion as to whether the valuation should be based on the total earnings of the railways which included the Government share or on the amount which the railway companies got under the agreement, which was £43 million per annum. As the result of discussions and talk over a long period the Government have come down on the decision that the £43 million was the right basis to accept. I think that is correct. That being so, to an outsider, who is not concerned with the details of these intricate matters, this will appear as the only fair basis. It would be very hard to make a valuation on something out of which the undertakings receive nothing. I gather that


most of the local authorities concerned have accepted this basis, and anyhow if they have not they can make their case upstairs. There is no reason on my part to delay the House any further, only again to thank the Minister for his most interesting and lucid explanation.

12.26 p.m.

Mr. Sparks (): I should like to say how pleased I was to listen to the Parliamentary Secretary moving the Second Reading of this very complicated Bill. I think that he did it in language that made perfectly plain the main principles with which we are concerned. I should like, however, to offer one or two comments upon the provisions of this Bill and to say that I do not think that the assessment is really as fair and as generous to the local authorities as it should be. It will be seen in the First Schedule that there are certain figures showing the net annual value of the undertakings in England and the cumulo yearly rent or value of the undertakings in Scotland. These figures make a total of £8,725,770, which is intended to be the figure upon which railways will pay rates to local authorities during the forthcoming five years or the fourth quinquennial period. These figures represent an increase of approximately 14 per cent. above the previous figures for the third valuation role. My contention is that the increase is totally inadequate, because the local authorities throughout the country are faced with very heavy costs in the postwar years as a result of the war period, during which there had to be a great deal of work left undone. This work must now be done. Therefore, I think that the local authorities are entitled to receive a more just share of the increased prosperity of the railways during the past five years.
As a matter of fact, during the past five years the average annuual net receipts for the railways have been in round figures £82 million. That figure is equivalent to an increase of 139 per cent. above the figures for the previous third valuation role. The figure in the previous valuation role was approximately £35 million. Therefore, the increase in net receipts of the railways during the past five years, amounting to 139 per cent., shows that the railways are in a position to pay more rates than is proposed in this Bill. I should like also to give one or two figures in relation to the actual rates which are

paid by the railways and one or two figures by way of comparison. In 1929 the railways paid in rates to local authorities £4,637,000. In 1941, the first year of the third valuation role, they paid £942,000.

Mr. Scollan (): Does that include Scotland?

Mr. Sparks: Yes. I do not want to tell the House, of course, that the railways receive all the advantages of that reduction. They do not wholly receive that advantage, because they became derated under the 1929 legislation, and what they received by derating they had to pass on to the Railway Freights Rebate Fund in order that charges on the carriage of certain goods and commodities might be reduced. Nevertheless, they received a fairly substantial advantage as a result of the operation of the 1930 Act. The average receipts, as I said just now, for this first year, 1941, of the Third Valuation Roll were approximately £35 million. For the contemplated period that we are now considering the receipts have increased to approximately £82 million.
But my complaint is this: that the Government apparently are not allowing the local authorities to receive the advantage of the increased receipts of the past five years, because they have fixed a sum of £43 million a year to be paid to the railway companies for the use of the railways during the period of Government control. Apparently they are basing their nett annual values for rates, during the coming five years, on the reduced payment of £43 million, rather than on the gross average figure of £82 million. I therefore say again, that the proposed increase of 14 per cent. which is suggested is totally inadequate for the local authorities, and ought to be substantially higher.
I should like to emphasise the precise effect of this new basis of assessment, and the proposals contained in this Bill, upon my own local authority. In 1929, the Acton Borough Council received in rates, from railway undertakings, £28,666. That was the average figure for a previous period. In 1941, the first year of the third valuation roll, that figure dropped to £2,856. As I explained previously, a proportion of that reduction is accounted for by derating legislation, which is purported to be made good to the local


authorities from annual Exchequer block grants. We estimate that we have received from the block grant, by way of compensation for losses due to derating of railway hereditaments, approximately £16,000 per annum, which left us with a loss, in 1941, of nearly £10,000 to our rates as a result of the operation of the 1930 Act. We say that in view of the annual loss which we have suffered since 1930, the increased costs which local authorities will have to bear in postwar years, and the tendency of the rates to rise, the Government should be far more generous in their approach to the local authorities. The figures which appear in the First Schedule should be increased substantially.
I hope I have been able to make myself intelligently understood by the House, because rating and valuation are a mysterious problem to all interested in local government matters. It is difficult to argue, especially in relation to figures and statistics. I hope that the Parliamentary Secretary may be able to hold out some hope that the figures in the First Schedule are not to be taken as definite, and that there may be some prospect of meeting the local authorities' requirements. It has been said that the local authorities agreed to the figures. I do not know what choice they have had, but I do know that the losses in my borough, as a result of the 1930 Act, have been fairly substantial year by year.

Earl Winterton: Would the hon. Gentleman direct the remainder of his interesting speech to the point that any increased amount such as he advocates will fall on the shoulders of the railway companies? Would he say, in addition to giving reasons why it is most undesirable that local authorities should have less money to spend, why it is desirable that the railway companies should provide more money?

Mr. Sparks: We are now discussing the basis for payment of rates during the fourth quinquennial period. They are based on the receipts of the railway companies during the years 1941–45. The railways earned. during that period, approximately £412 million gross. The nett revenue of the pool reveals that in 1941£45 there was a surplus of approximately £412 million. The Government


have agreed that they will pay to the railway companies £43 million per annum.

Earl Winterton: That goes far outside the whole scope of this Bill. The undertaking which the hon. Member has just referred to did not refer exclusively to rating, but to all sorts of things, such as the provision of new rolling stock, and the like.

Mr. Sparks: I realise that. I am probably taking longer to explain this point than I ought to take. The Government are basing their figures in the First Schedule, not on the surplus of £412 million, but on the reduced sum equivalent to £43 million per annum which they are paying to the railway companies. They are basing these figures on £215 million, and not on the gross figure of £412 million.

Mr. Key: Valuation here is being made on the nett annual receipts of the railway companies. They are £13 million per annum. Does my hon. Friend suggest that the Government should pay more to the railway companies in order that their valuation may be higher? Does he say that, instead of the Government retaining it, it should be paid to the railway companies so that we can increase their valuation?

Mr. Sparks: We are now up against very complicated and technical matters. I know the Government have agreed to pay the companies £43 million per annum, but they have made a good profit out of the railways during the past five years. They are £197 million in pocket as a result of their agreement with the railway companies.

Captain Crookshank: That is the answer to the question.

Mr. Sparks: But the local authorities ought not to suffer on that account. I hope the Government will be a little more warm-hearted about this. If they cannot give to the railway companies more than £43 million each year, can they help the local authorities by an increase in the Exchequer block grant? Can they make good some of the loss which my local authority has suffered as a result of the 1930 Act? The loss to the rates in my own locality has been substantial. I have tried to answer the point put by the Noble Lord the Member


for Horsham (Earl Winterton), although I do not know whether I have succeeded in doing so to his satisfaction. The essential point is that the Government have done very well out of their agreement with the railway companies, and there should be ways and means of increasing the net annual amounts, as outlined in the First Schedule, and give the local authorities a squarer deal than they have had up to now.

12.41 p.m.

Mr. Douglas (): Before I come to the substance of what I wish to say, it would be well if I made it clear that, although I am a member of the Railway Assessment Authority and of the Anglo-Scottish Railway Assessment Authority, I am not speaking on their behalf, but am expressing my own opinion on this matter. It has long been evident that some legislation ought to be introduced to deal with certain defects which have been disclosed in the operation of the Railways Act, 1930. What the Measure now before us does is to make an arbitrary valuation for the purposes of the next quinquennial valuation of railways, but it does not, except in regard to one point in Clause 2 of the Bill, make the fundamental amendment which is necessary to provide a permanent machinery for dealing with this problem. I do not know what is in the Minister's mind with regard to that. It may be that, because of the prospect of nationalisation of the railways, he considers the matter should stand over, but it seems to me that it will have to be dealt with, unless the proposition is that all nationalised industries are to cease to contribute to local rates. Certainly, that is an idea which, so far as I know, has not been advocated by anybody, and it is not the basis upon which the affairs of the State have been conducted in this country in the past. On the contrary, it has always been the custom for a contribution in lieu of rates to be made in respect of Government property.
Therefore, I return to the point that a permanent amendment of the principal Act is necessary, and this Bill does not make that Amendment. I think that is a great pity. I do not know whether hon. Members realise that, from the time when the 1930 Act was passed to the present moment, the Railway Assessment Authority has not made a valuation of any one

of the mainline railway companies. The first valuation which it purported to make of the Southern Railway Company was the subject of litigation which extended over a long period of time and ultimately went to the House of Lords, with a result very different from that which had been contemplated. The effect of this was that the valuations of the mainline railway companies for the first quinquennium were subjected to a process of negotiation and compromise. The same thing happened with regard to the valuations of the second quinquennium. There was no valuation, but a species of bargaining between the local authorities and the railway companies in which the local authorities got a very bad deal. In the third railway valuation roll there was also a compromise, and now that we come to the fourth, again the figures are arbitrarily being written into the railway valuation roll.
That is a highly unsatisfactory state of affairs. It arises in part—I say this expressly and deliberately—from the fact that the railway companies have, with great persistency and ingenuity, and in the most suave and delightful fashion, done everything they possibly could to obstruct the operation of the Statute, but it also arises because there are fundamental defects which have arisen out of the long history of the valuation of public utility companies. Those defects are as follows. First of all, a valuation is made on the basis of the average net profits or net receipts of the railway companies for a past period of five years, but the valuation operates for a future period of five years. Into this estimation there have been introduced all kinds of conjectures about what might happen in the future, suggestions about the risks which railway companies run, and other means of discounting the future, and therefore, reducing the valuation, in spite of the fact that it purports to be made upon definitely ascertained facts of the past. The railway companies have always got the benefit of saying, "We are conducting a most uncertain, risky and dangerous trade, and therefore, our valuation for the future ought be based upon the assumption that we are standing at a high degree of risk."
Now we come to this period in which the railway companies have been enjoying a guaranteed revenue from the State of £43 million a year, and in which the railways have actually been earning on


an average more than double that figure. In this respect, my hon. Friend the Member for Acton was correct. The earnings of the railway companies during that period have been, as he mentioned, over £80 million a year. It is true that the earnings have been divided between the railways and the State, and that there has been, in effect, a partnership between the two; but that is no reason for reducing the valuation of the railways. The only result, of course, would be that under the agreement which was made with the railways for their control, the State would have to pay the increase of the valuation by a deduction from its share of the earnings of the railway companies. They would still remain with their guaranteed £43 million.
Therefore, one of the primary objects of this Bill, which has not been mentioned so far, is to make sure that the share of the State will not be impinged upon by having any regard to the part of the earnings of the railways which it appropriates. There is a good deal to be said for that, but it is not very helpful to the local authorities that they should be deprived of the benefit of the increase in the earnings from railway operations in this period, as they have been deprived of them in previous periods owing to the way in which these valuations have been made and the contention which has been continually made that the railway companies have been running under great economic risks, and therefore, although their valuation are based upon ascertained facts of the past, they should he discounted with regard to the future. So, by this ingenious procedure, coupled with two others which I think it is as well I should put on record, as illustrating the defects of this procedure, the valuation of railway companies, like that of all public utility companies is carried on. It is not an isolated matter, and, therefore, the importance of the subject is very great.
The valuation of the railway companies is conducted upon the basis of ascertaining the receipts of the undertaking, and deducting from those a sum which represents the earnings of the movable assets—the rolling stock, etc. The amount to be deducted is calculated by taking a percentage of the estimated capital value of the movable assets the balance left after this deduction is the net annual value or the rent of the land and of other fixed assets,

etc. The valuation of the rolling stock is made upon the basis that the whole of it is to be bought tomorrow morning, at the present day price of replacement, without regard to the sum of money which it actually cost the railway companies to acquire it all in the past. Yet that sum of money is the actual capital on which they are conducting their business. Secondly, upon that capital valuation of the rolling stock so estimated is based a percentage of earnings, such as 12½, 15, 17½ or even higher, again on the theory that the railway companies are operating their undertakings at such extreme risk that they have to be compensated for embarking their capital, although as we all know, they continue to operate their companies and pay their shareholders moderate dividends. It is high time that this matter was properly dealt with, instead of by a patchwork such as is contained in the present Bill.
Lastly, I may as well point out the consequences which accrue to the railway companies and to their shareholders. If the contentions which the railway companies have put up in the past with regard to these matters, and which are being put up at this moment, are true, as a result of which the net annual value of all the main line railway companies of the country has been put at a figure of £7 million or thereabout, I would ask the House to consider the logic of that position. If there is to be a proposal for nationalisation of the railways, and the railways are to be valued on that basis, because of the theory that they are operating at a risk, they are only going to get about six or seven years' purchase of that net annual value. This is a matter which might very well be borne in mind in the negotiations in regard to these matters. Those are the grounds upon which I am saying, without qualification, that during the past 16 years, and indeed for very much longer, the railway companies of this country have been very seriously undervalued.

12.55 p.m.

Mr. Eric Fletcher (): I am sure that the whole House is indebted for the speech to which we have just listened from the hon. Member for North Battersea (Mr. Douglas), who over a long period has made a very special study of this rather abstruse and intricate subject. In the course of his speech he made a


number of observations which I am sure will be fruitfully studied by His Majesty's Government, in connection with the discussions that will take place with regard to their project for the nationalisation of the railways. My justification for rising is that it happens to have fallen to my lot during the last two or three years to have been acting as the chairman of a body representing all the local authorities in the country in their negotiations with representatives of the railway companies and of the predecessors of the present Minister, to see whether some agreement could be reached for a more effective and satisfactory valuation of the railways for rating purposes. I desire merely to add a few sentences to the remarks of my hon. Friend in order to stress the way in which the Act of 1930, which this Bill seeks to amend, has operated, to the profound dissatisfaction and prejudice of local authorities. It is no exaggeration to say that the Act of 1930 has produced results that were entirely contrary to the anticipations of local authorities and considerable injustice has resulted from the failure of railway companies to pay their fair share of rates, as compared with other ratepayers.
It is, therefore, worth while that the House should know and have on record precisely what was intended by Parliament in passing the Act of 1930. Prior to that time, as the Minister has said, the railways were rated on a parochial principle. In each parish an estimated rental had to be worked out of the particular railway plant, stations and undertakings in that parish—all on a very complicated system. Each parish worked out the rateable value of the property of each railway undertaking in its parish. The method was cumbersome in the extreme; there was no co-ordination for hearing appeals; there was a lack of uniformity and the whole procedure was most unsatisfactory. Further difficulties arose when the railway amalgamations took place shortly after the end of the last war. Between 1918 and the passage of the Act of 1930, there were protracted discussions between representatives of railway companies, local authorities and Government Departments concerned, to try to produce a Measure which would simplify and rationalise the whole basis of the rating of railway companies. To some extent the Act of 1930 was an agreed Measure.

The significant Section of the Act and that to which the local authorities attached importance is Section 4 (2) which, with the express object and purpose of avoiding unnecessary litigation and the complications of the past, provided that:
The Railway Assessment Authority and any court before which any determination of the Authority is under appeal shall not be bound to give effect to any custom or practice affecting the valuation of railway hereditaments which obtained prior to the passing of this Act in regard to the deduction or allowance to be made in respect of the capital of a tenant, but shall have regard to all relevant circumstances and all material considerations with a view to securing that such estimated rent shall represent a fair and just division of the net receipts as between landlord and tenant.
Notwithstanding that provision, which was aimed at giving the Railway Assessment Authority, of which my hon. Friend the Member for North Battersea has been a distinguished member for many years, a free hand by applying equitable principles to arrive at a fair annual value of the railways, when the first assessment on the four main line railways came to be made for the first roll period—on the Southern Railway—there was very expensive and very protracted legislation which went to the House of Lords, and in the result the assessment made by the Railway Assessment Authority, was cut down by about half on the ground that, notwithstanding the Section in the Act I have just quoted, it was necessary for the Railway Assessment Authority and for the courts to apply the principles of rating which had been in operation before. The absurdity of the position was made apparent when this decision was applied by the Railway Assessment Authority to the next undertaking, the London and North Eastern Railway, and reached the conclusion that the assessment of that undertaking must be nil.
The manifest incongruity of that position meant the complete frustration of the purposes of the Act of 1930. It became impossible for the Railway Assessment Authority to perform its functions. as contemplated in the Act. It would have been ludicrous if the railways notwithstanding the profits they were earning had been given a nil assessment and escaped any contribution to the rates at all. Negotiations took place, and arbitrary figures were inserted both for the, first roll and for the second roll after dis-


cussions which were not very satisfactory to the local authorities. When the third roll came to be considered, war had started, and the Railway Assessment Authority confessed its complete inability to apply the provision of the Act of 1930, and as a result of discussions with the railway companies who alone had access to the relevant information and accounts, again figures which were completely arbitrary were inserted. A round figure of £6 million for the four companies was thought convenient and was then split up on no rational basis between the four companies.
My right hon. Friend the Member for Horsham (Earl Winterton) has asked why railway companies should contribute more by way of rates than is provided for in this Bill. The reason is that owing to the operation of the Act in the past railway companies have paid far less than their fair contribution to the rates. Therefore, the local authorities feel that, having lost on the swings, they should not also lose on the roundabouts in view of the fact that the railway companies have enjoyed considerably enhanced net receipts during the war years, and they feel that justice would be done if the Act were applied. I am afraid that this subject is very abstruse, but I will try to explain the position without reference to complicated sets of figures. During the war years, the railway companies had the advantage of having their rate liabilities calculated by reference to the lower earnings of the pre-war years. Under the Act, the accounting period for the fourth roll which we are now considering is the war years. The railway companies would therefore gain both ways if they were now able to say, "Ah, well, the war years were anomalous and therefore the accounting period provided in the Act should now be disregarded."
I have no hesitation in saying that but for one fact all local authorities would be resisting the Bill now before the House as being completely inadequate and as perpetuating an injustice from which all local authorities feel they have been suffering as a result of the Act of 1930. Local authorities are induced to give this Bill their reluctant and qualified approval because of the announcement recently made of the intention of His Majesty's

Government to nationalise the railways. That introduces an entirely different feature into the situation. If the railway companies were to remain privately owned undertakings, local authorities would be pressing very strenuously for an upward revision of the figures provided in the Schedule to this Bill and would also be pressing for a complete review of the machinery of the Act of 1930 which has produced such completely grotesque and unreal results. Local authorities are giving reluctant consent to the purely temporary provisions which are being made for dealing with the fourth roll period because the 1930 Act cannot be put into operation and because some machinery is necessary to provide, during the next few years, a basis on which the railway companies should pay a contribution to local rates. But as the railways are shortly to be brought under Government control, new problems will have to be faced both by the Government and the local authorities.
I hope that we shall have an assurance from the Minister that these figures now being inserted in the Bill for the fourth roll period are not intended as any permanent basis on which contributions will be paid by nationalised railway undertakings to local authorities. That argument would be completely unsound.
The basis on which the Minister seeks to justify this Bill is that the railway companies and their shareholders have been receiving only £43 million during the last four years although the earnings of the railway companies have been considerably higher—£89 million one year, over £100 million another year, and, as I think the Minister himself said, an average over the last four or five years of approximately £79 million. If these railway companies had been nationalised a few years ago or were already nationalised, the argument which is the whole basis of the Minister's present proposals would no longer be available to him.
If these railway companies were State-owned undertakings, as they will be in a few years' time, there could be no such argument. Their net receipts average some £79 million. They are the profits of the undertaking. Rate contributions to local authorities ought to be calculated on that basis, and I want to stress that if this legislation were not introduced and


if local authorities had been left to Lace this matter at arms length in the law courts with the railway companies, they would have contended that £79 million being the average over the last five years would have been the right figure, because the Act of 1930 does not refer to the net receipts of the company abut to the net receipts of the undertaking.
The basic principle of rating property is to gauge the productive value of the hereditament in question; that is the basis on which an attempt is made to spread rate burdens equitably between one ratepayer and another. Therefore, testing the ability of the owners of the undertaking to pay, whether it be in private hands or in Government hands, the correct figure from which to proceed is the net receipts of the undertaking; i.e., the average of £79 million. It so happens that during the five years of the war those net receipts have been divided as to £43 million to the railway companies, and the Government, I am glad to say, have had the balance. Now some provision has to be made by Parliament as to what contribution shall be made to local authorities during this period. The figure of £43 million has been imposed by the Government and has then to be used as the starting point on which to calculate what is the net annual value of the railway companies.
In order to arrive at the figures inserted in the Bill, a rough-and-ready percentage of 20 per cent. is taken to produce the figures in Part I of the First Schedule which total £7,814,000. Now the House should appreciate that for the purpose of this Bill it has been assumed that 20 per cent. is an appropriate percentage to apply to the net receipts of a railway company, whether the net receipts are £42 million, £79 million, or anything else, in order to arrive at the net annual revenue. I want to emphasise that this principle of applying 20 per cent. is not accepted by local authorities. It must he remembered that prior to the Act of 1930 there were considerable discussions between local authorities and railway companies to see if an agreed basis could be reached for rating railways. Those negotiations must have taken a long time because there were transitory provisions in force between 1918 and 1930. During those discussions local authorities contended that the appropriate percentage to apply to the net receipts of a railway in

order to arrive at the net annual value was 30 per cent. The railway companies were willing to accept a minimum of 20 per cent.; then, if I remember rightly, some compromise was under consideration of a figure of 25 per cent., but local authorities thought that 25 per cent. was not enough, and no agreement was reached.
It should also be remembered, that prior to the Act of 1930, and prior to the operation of the transitory provisions, the total of the assessments on railway hereditament throughout the country represented an average of well over 40 per cent. of the net receipts. Therefore it should again be stressed that local authorities have always contended that the appropriate percentage to apply to the net receipts in arriving at the net annual value is not anything as low as 20 per cent., which is the figure assumed for the purposes of this Bill, but something much more in the order of 30 per cent.
I have ventured to make these remarks because I think the House should know, now that it is asked to amend the 1930 Act, that probably no Act on the Statute Book has ever produced such unreal, perverse and grotesque effects as this Railways (Valuation for Rating) Act of 1930. By all means let the House amend it for a short interim period, but let it also remember that the Act must be swept away. It is no use imagining that this Act and its provisions, which have been productive of such expense, uncertainty, unreality and confusion, is of any use as a basis for the valuation of undertakings of this kind. It should also be remembered that when the railways are nationalised, and it becomes necessary for my right hon. Friend the Minister of Transport and the Parliamentary Secretary to consider these matters that local authorities will require the whole history of this matter to be taken into account. They will not expect this interim measure to be used as the basis for future rate contributions by State owned railways. I hope, therefore, that when the Minister comes to reply, we may receive from him some assurance that those considerations will be borne in mind.

1.17 p.m.

Mr. Seollan: I want to find out a few things about this particular proposal. Unfortunately, I was unable to be here when the Parliamentary Secretary made his statement, and I may be raising a point that has been dealt with already, but I will take a chance on that.


The position in Scotland with regard to rating is somewhat different from that which exists in England, and cities like Glasgow find themselves in a rather curious position. A large number of the concerns which paid fairly high rates in prewar days have now gone out of existence. A large number of the concerns that were necessary during the war have also gone out of existence, with the result that the rating valuation of the city is much lower than it was.
We have a system in Scotland whereby the local authority assessor goes to a place, examines it, finds as near as possible what is the turnover, and what are the likely profits. He puts a valuation on it, and rates are paid on that valuation. There is a court to which parties can appeal if they consider the valuation too high. In Part I of the First Schedule the cumulo yearly value of the London Midland and Scottish undertaking is £598,960. Supposing the London Midland and Scottish undertaking in the city of Glasgow is £250,000—I do not know the figure—and the city assessor assesses the value of the undertaking in the city of Glasgow at £300,000, is the Minister prepared to make any provision for negotiating the difference between the city assessor and the railway assessing authority? Obviously not. I would like to ask whether it is not a bit undemocratic arbitrarily to put down a figure and tell the authorities they have to accept it. I would remind the Minister that the Scottish people, when their representatives signed the Act of Union never for a moment dreamt they were going to have a tax placed on them arbitrarily without the opportunity of being able to consider the matter. This is an indirect tax and the powers are taken from the local authority to rate according to the proper value. I hope the Parliamentary Secretary will take this matter into consideration and promise that with the Minister he will see whether something cannot be done to accommodate local authorities in Scotland, instead of doing it in this arbitrary fashion.

1.21 p.m.

Mr. Key: So far as I have been able to follow the Debate, it seems to me that the arguments which have been used are not against what the Bill does, but what it fails to do. The Bill seeks merely to give the necessary basis, with the 1930

Act in existence, for the fourth quinquennial period. It is not proposed to alter the 1930 Act. With much of what has been said in regard to the operations of that Act, I have a great deal of sympathy as an old local government administrator. But it is not the purpose of this Bill to alter the operations of the 1930 Act. The purpose of this Bill is to provide the necessary figures for these operations to be carried out and we have had to determine what can be regarded as a reasonable figure for the net annual returns of the railway undertakings. For the operations of the railways in the years ahead the mere fact that during the war the figure was as much as £79 million does not make a fair basis for valuation if the railways only got £43 million out of that £79 million. What we have to deal with is a fair basis for the valuation of the railways in 1946–1951.
It may be said that in the years gone by there ought to have been another valuation of the railways in the period 1941–1946, but we are dealing with the period ahead of us. I cannot be expected to give an undertaking on what will be the attitude of the Ministry to the valuation and rating of railways as a permanent thing in the future, or what would be done under conditions of nationalisation of the railways. It may well be that the whole problem of the valuation and rating of public utility undertakings needs to be dealt with. I think there is a great deal to be said for that. In answer to my hon. Friend the Member for West Renfrew (Mr. Scollan) I would say that this Bill does not attempt to deal with the methods by which the valuation is carried on by the Assessor of Railways and Canals in Scotland. It leaves in existence the methods followed in the last 10, 15, or more years and says that instead of arriving at the figures themselves by their own operations, the Railway Assessment Authority in England, and the Assessor of Railways in Scotland, are to take the figures here put down as being the net annual values of the railway undertakings. How those figures are to be applied in Scotland remains a matter for the assessor, in the same way as has been the case after the railway assessment authorities have decided the figure in the quinquennial period.

Mr. Scollan: The railway rating authority has fixed this figure. The


assessor in the case of the city of Glasgow may assess the value of the same undertaking at least £50,000 more. The whole point is that there is no appeal. When we have a Government-appointed assessor that is undemocratic.

Mr. Key: The apportionment of these figures between various local authorities is an operation of the assessor. As to the question as to whether he has operated fairly or not, I have already said that actions in the courts are still possible against the draft rolls which will be provided. This Bill makes no change as regards ordinary operations, and does not attempt to settle the value of particular railway property in Glasgow. It merely says to the Assessor of Railways and Canals that this is the cumulo figure he has to take. But for the war, it would have been arrived at by other means, but this is the figure he has to take as covering the net value of the undertakings in Scotland for this particular purpose. I think the argument of my hon. Friend the Member for Acton (Mr. Sparks) that the valuation of the railways should be made to vary with the expenditure of the local authority is extraordinary. The valuation of railways does not enter at all into the question of the expenditure of the local authority, which is dealt with in the rate poundage after the apportionment has been decided.

Mr. Sparks: Perhaps I did not make myself clear. I was not advocating that the rates paid by the railways should vary with the expenditure, up or down, of local authorities. What I was thinking of was that local authorities were facing considerably increased expenditure in the postwar years as a result of failure to carry out works during the war period. In view of that expenditure and the tendency of the rates to go up, there should be a greater contribution from the railways to the rate, and the basis should be increased in order to make provision for that.

Mr. Key: Then why should we pick out the railways? Why say that because the expenditure of local authorities is to be increased, we must increase the rateable values of the railways and not the rateable value as a whole, merely on the plea, not that they have earned more or deserve to pay more, but that the expenditure of the local authority has been

increased? We cannot settle the question of valuation of an undertaking on that basis. If the expenditure of the local authority is increased, the expenditure is met by increasing the rate poundage. The income of the railway companies was increased by 12.7 per cent. If we take this £43 million over the 1935–39 period that was made the basis of the previous valuation, the valuation of the railways has been increased by 14.1 per cent. and, to that extent, it is probably true that we have done what my hon. Friend the Member for Acton asked should be done by increasing the proportion of the valuation.
Question put, and agreed to.
Bill accordingly read a Second time.
Bill committed to a Select Committee of six Members, four to be nominated by the House and two by the Committee of Selection; All Petitions against the Bill presented at any time not later than five clear days after the making of this Order to be referred to the Committee; Petitions against the Bill may be deposited in the Committee and Private Bill Office, provided that such Petitions shall have been prepared and signed in conformity with the Rules and Orders of this House relating to Petitions against Private Bills; Petitioners praying to be heard by themselves, their counsel, or agents, to be heard against the Bill, and counsel or agents heard in support of the Bill; Committee to have power to report from day to day the Minutes of Evidence taken before them; Three to be the quorum.—[Mr. Key.]

Orders of the Day — LICENSING PLANNING (TEMPORARY PROVISIONS) BILL [Lords]

Order for Second Reading read.

1.31 p.m.

The Under-Secretary of State for the Home Department (Mr. Oliver): I beg to move, "That the Bill be now read a Second time."
This is a short and, it is hoped, a non-controversial Measure, designed to provide a little elasticity in the arrangements laid down in the Licensing Planning (Temporary Provisions) Act of 1945 for the constitution of licensing planning areas and licensing planning committees. It proposes no fundamental change in the


scheme laid down last year, but is designed to meet one or two difficulties which have arisen in the working out of that Act. It will be remembered that last year's Act was founded on a report of a Select Committee over which Mr. John Morris, now Mr. Justice Morris, presided. Its object was to provide means by which the licensing justices and the local planning committees could collaborate in securing the redistribution of licensed premises in connection with the redevelopment of war damaged areas. For that purpose, Section I of the Act empowered the Secretary of State, after consultation with the licensing justices and the local planning authorities, to make orders declaring such an area to be a licensed planning area.
Section 2 provided that a licensing planning committee should then be set up consisting of a chairman appointed by the Secretary of State and of representatives, in equal number, of the licensing justices and the local planning authorities. The Committee is then required, after such consultation and negotiation as they think desirable, to formulate proposals for the redistribution or surrender of licences within their area and to submit these proposals for confirmation to the Minister of Town and Country Planning. By the end of last year, 17 licensing planning areas had been constituted under the Act. From most of them no suggestion has come that the machinery of the Act is not working smoothly, but in a few areas difficulties have already arisen which cannot be overcome without amending legislation. The first of these difficulties arises from the fact that under Section i of the Act of 1945 the original licensing planning areas must consist of contiguous licensing districts. In general, a licensing district consists of complete and contiguous local government areas and in such circumstances no difficulty arises. There are districts, however, where this is not the case. Thus the borough of Dover plainly should be a licensing area but, owing to a provision which is tucked away in Section 2 (5) of the Licensing Consolidation Act of 1910, the Dover licensing district includes the liberties of Dover as one of the Cinque Ports. This means that, as the law stands, the Dover licensing planning area must include two areas which are detached from the borough, and the Dover committee must include representatives of four local plan-

ning authorities which are in no way concerned with Dover itself.
Again, it is desired to declare a licensing planning area at Penge, but Penge licensing district includes one half of the borough of Beckenham and the other half is in the widespread Bromley licensing district, which contains four local planning committees, besides the Beckenham borough council, which have jurisdiction over various parts of that area. As the law stands, all these authorities would have to be represented on the proposed committee. It is unnecessary for me to stress to the House the necessity of having reasonably compact committees if useful work is to be done. When it is remembered that for every representative of a local planning committee there must be a representative of the licensing justices, it is easy to understand how large and cumbersome such committees would be. Therefore, it is necessary to have some restriction, or some relaxation from the existing Act. Clause I of the Bill provides:
Where
(a) a county district forms part only of a licensing district,…
—as at Dover—
or (b) a county district includes parts of more than one licensing district.
as at Beckenham, the county district may be taken as a unit in declaring a licensing planning area. The term "county district," of course, includes a borough or an urban or rural district.
Clause 2 deals with the difficulty in regard to overspill areas. Section (3) of the 1945 Act empowered the licensing planning committees to apply to the Secretary of State for orders adding to their areas licensing districts to which there has been, or is likely to be, a substantial transfer of population or industry from the original area. The object is to enable the committee to secure the transfer to the overspill areas, of licences needed there and not needed in the original areas. Here again, the Section treats the whole licensing district as a unit and, in the absence of grounds to the contrary, this would be the natural course, but a good deal depends on whether the overspill is widely spread over the district, or is mainly concentrated in a small area of it—as, for example, in a small new housing


estate—and also on the extent and number of the districts involved. Up to the moment, no order adding an overspill area has been made The matter has been considered by several committees and they have been dismayed at the extent of the areas which, as the law stands, would be added to their original areas if they are to deal with overspill housing estates. The difficulty has been felt chiefly by the County of London committee, which already had a very heavy and urgent task in London itself, while it also ought to deal with numerous housing estates outside the county. The committee would be seriously overburdened if it had to deal with the whole licensing district containing these housing estates. The difficulty is not confined to London. At Sheffield, an exceptionally large licensing district would require to be added in order to cover one corporation housing estate, and, at Portsmouth, two large licensing districts would require to be added to cover one housing estate lying on the border between the two districts.
Clause 2 of this Bill therefore empowers the Secretary of State to make Orders for the addition to licensing planning areas of overspill areas consisting of parts of licensing districts. Incidentally, this will provide the means of meeting a position which may arise if two licensing planning areas, for example, London and West Ham or Portsmouth and Southampton, overspill into the same licensing district and both the Committees ask for part of the district to be added to their area.
Clause 3 (I) contains further provision for sub-committees. Section 10 of the 1945 Act, which makes special provision for the County of London, empowered the Secretary of State to provide by Order for such committees to consider such matters as may be specified in the Order. This was done, primarily, in order to provide for local sub-committees to include representatives of the Metropolitan Borough Councils, which are not planning authorities and entitled, as such, to representation on the licensing planning committee. It was not, therefore, thought necessary to make provision for sub-committees outside London. When, however the Order setting up London sub-committees came to be made, it was found advisable to entrust to them certain duties with regard to applications for new licences and temporary

removals which might equally well be entrusted to sub-committees elsewhere. This, however, could not properly be done without statutory authority for sub-committees, and, therefore, Clause 3 (I) provides that Orders constituting licensing planning areas outside the County of London, or adding overspill areas to them, may include provisions for sub-committees to consider such matters as may be specified in the Order. Any such Order would, of course, be made only after full consultation with the licensing justices and the planning authorities concerned.
Clause 3 (2) deals with the difficulty which has been foreseen where Orders are likely to be made adding a number of overspill areas to the original area. But a joint planning committee, as being concerned as well as the district council, in which case the minimum number of additional representatives is four. Where, therefore, a number of areas are added, the committee would become unwieldy if all the members were to concern themselves with all parts of the area, and the original members might actually be outnumbered. The Bill therefore provides, under Clause 3 (2) for the provinces, and Clause 3 (4) for London, that the voting rights of additional representatives may be limited to matters relating to the overspill areas with which they are concerned. This limitation is confined to voting on the main committees. If a sub-committee is set up for an overspill area, the representatives of that area will have full rights as members of the sub-committee and will also be able, as members of the main committee, to vote on all points arising when the report of the sub-committee is considered by the main committee.
The remaining provisions of the Bill are these. Clause 3 (3) provides merely for the variation and revocation of Orders under Clause 3 (I) and (2). Clause 3 (4) provides, in London and elsewhere, that representatives of the overspill areas may be members of the main committee as well as the sub-committees, and Clause 3 (5) empowers planning committees to pay secretaries of sub-committees, subject to the same conditions laid down in the Act of 1945 for the payment of secretaries of main committees. Under Section 2 (8) of the 1945 Act, these expenses will be defrayed by the local planning authorities concerned, who will, of course, be represented on the licensing planning committees.


Roughly and briefly, those are the points which this amending Bill seeks to add. It will be observed that there is no departure from the principle laid down in this House last year, when the original Act was passed. This is purely a machinery Bill, and will, when it receives the Royal Assent, very materially help the committees to do their work and discharge their duties much more expeditiously.

1.47 p.m.

Mr. Osbert Peake (): The House is indebted to the Under-Secretary for his explanation of a complicated Measure, an explanation no less lucid, and I think rather more concise, than that given by the learned Lord Chancellor in another place. I was concerned with the early stages of the preparation of the original Measure, which, as the hon. Gentleman stated, was based upon the report of a Committee presided over by Mr. Justice Morris. It was clear that, in the areas of extensive war damage, considerable replanning of licensed premises would be required. Parliament, in the past, has always laid it down that beer should, as far as possible, be kept out of local politics, and in the past questions affecting the numbers and location of licensed premises have been wisely left in the hands of justices. However, where areas of extensive war damage are concerned, it is perfectly clear that planning considerations must also arise, and therefore, the scheme was evolved of a joint committee of licensing justices and representatives of the planning authority, with an impartial chairman nominated by the Home Secretary. The original Bill made provision for the operation of sub-committees in the county of London area. This Bill, in its main provision, enables sub-committees also to operate in other parts of the country. As the hon. Gentleman has so clearly explained, the provisions of the Bill will, in fact, simplify the operation and administration of the principal Act of March, 1945. For those reasons, we offer no opposition to it, and we trust that it will receive a speedy passage through the House.

1.50 p.m.

Mr. James Hudson (): I join with the right hon. Gentleman in his expression of gratitude to the Under-Secretary for his extremely able statement

of the case for this Bill, for which we are indebted to him. Naturally, I do not altogether share the view of the right hon. Gentleman, because this Bill has to be considered with the Act that was passed last year. Those who are satisfied with the Act of last year will feel that things are quite all right in this Bill. I admit that the Government were in a great difficulty because there were, as the hon. Gentleman has explained, districts that ought to be included in such a way that effective supervision of the replanning of those areas could be carried out. I know that that is effectively provided for in the Bill, but all the disadvantages inherent in the original legislation of 1945 will remain in the extension of the earlier Measure, or as it has been called the added elasticity given to the earlier Measure by the Bill now before us.
The great disadvantage of the main legislation was hinted at by the right hon. Gentleman. The effective supervision of licensing formerly rested on the shoulders of the magistrates, with the assistance of appeals by the general public. It is a very important point in licensing administration that there should be the right of objection at the earliest possible stage when a licence comes to be considered. That right of objection, to some extent, disappears under the legislation of 1945 so far as those areas are concerned. Provision was made for an ultimate appeal to the Minister of Town and Country Planning, or to a court of inspection which he would provide under the Measure, but that was late in the proceedings under the 1945 Act Under the Bill which we are now considering, everything is cut and dried so far, as the granting of a new licence is concerned as between the newly set up committees and the trade, who are able to meet practically behind closed doors and fix up the scales on which new licences shall be provided. There is, of course, the safeguard that the committees will include men experienced in the licensing courts. Half are to be drawn from the licensing justices, but the other half will be drawn from public authorities, and the danger that will arise in connection with the earlier legislation is rather intensified in the smaller districts which are now to be included under sub-committees under this Bill.
For example, London has housing estates pushed out beyond the borders of the London County Council area which,


under the provisions of this Bill, will have to be dealt with by sub-committees consisting of a few people drawn from the housing estate who, with representatives of the magistrates, will sit down and consider the problem of licensing in that area. It is surely probable that the gentlemen appointed to represent these "overspill areas," as they are called in the legislation, will not have the grip of the situation that they should have, if proper provision is to be made. I regret that, as did 30 Members of the last House of Commons, when a Motion was discussed which sought to remedy that sort of difficulty by providing that a poll should be taken in all districts where licences were to be granted. I agree that that Motion was rejected, but it was a very different House of Commons then and I am pretty certain that the Members who are here now would prefer the right of public objection to be brought back. Indeed, many of them said so explicitly before they were returned to the House, in answer to questions submitted to them by temperance and Church bodies.
I admit that that was not so in the original legislation, and it would be difficult for the Government to deal in this strictly limited Bill with the special problems that caused them to bring it in without going back on the whole original legislation. I felt I ought to say this because there is a grave doubt whether the new planning committees are taking into account the objections which the former Under-Secretary of State promised would be taken into consideration. It was promised that, as far as possible, churches, chapels and youth organisations, and people generally concerned with the public welfare in any area, might have their views considered before any final decision was taken. When the Government were further pressed upon the point the Solicitor-General of those days—I am glad to see the present Solicitor-General is here today, and perhaps he will be able to give me some undertaking on the same lines—assured us that all such objections would be taken into account.

Mr. Deputy-Speaker (): I am not sure that the hon. Member is in Order. This Bill merely enables parts of licensing districts to be included in licensing planning areas. The question of local opinion or local option, or whatever it may be, does not seem to arise.

Mr. Hudson: With all respect to your Ruling, Mr. Deputy-Speaker, it arises in regard to these overspill areas, where, as I have tried to show, the members of the committees and sub-committees are now more likely than ever to be unaware of all the factors of the case, and more likely to have had less experience in licensing matters than had the magistrates of the past. For that reason the right of objection promised in connection with the original legislation should be carefully safeguarded.

Mr. Deputy-Speaker: The hon. Member does not say what right of objection he wants.

Mr. Hudson: The right of objection to the grant of licences by a sub-committee set up under this Bill.

Mr. Deputy-Speaker: The grant of licences does not arise on this Bill. It does not seem to me to have any direct regard to the question of the issue of licences as such. The hon. Member has misconceived the object of the Bill, or, at any rate, he is certainly out of Order in what he is saying now.

Mr. Hudson: Of course, I must bow at once to your Ruling, Mr. Deputy-Speaker, if you definitely rule that I am out of Order. But may I ask you to consider the purpose of this legislation? This Bill states that it must be construed with the original Act. The subject of that legislation was the grant of licences removed from bombed areas into other areas How will there be control in the overspill areas in, for example, Sheffield, Portsmouth, London, and other places, of the grant of the licences or the grant of the removal of the licences from bombed territory? How will the rights of the public, the rights of objection by the public, be safeguarded in those areas? I was trying to show, that undertakings were given in the last Parliament on that matter. I would submit that it is right for me to ask of a new Government, in connection with this legislation, that this question of the right of objection by temperance bodies, Churches, youth organisations, welfare societies, and so on, should be watched by the careful supervision by the Home Office and the Government authorities. However, I will not press my point further. I can see the difficulty in which you, Mr. Deputy-Speaker, are placed in regard to this


matter. I am in the same difficulty myself. I have really said all that I want to say on that question.
The further point I wish to make is, perhaps, parallel with what I have already been saying. There was in the old Measure, besides provision dealing with actual licensed premises, reference to other places where alcoholic beverages could be sold, for example, bottle shops. It was agreed that the question of bottle shops should be taken into account—

Mr. Deputy-Speaker: Really, that has nothing to do with the Question that this Bill be read a Second time.

Mr. Hudson: It was agreed in the last Parliament, and it was ruled, that the legislation covered the point, and that the question of bottle shops should be taken into account in the matter of general supervision in an overspill area or reconstruction area. It was stated at the time in the House of Commons—again by the Solicitor-General of that time—that there was really no difficulty about bottle shops, that they could come under supervision under different legislation, Defence Regulation 55B. That was mentioned as being adequate to protect Committees in dealing with this question. It was backed by the House of Commons at that time. But since then that Regulation has gone. There is nothing left, either in the original legislation or in this legislation, to cover that point which was then allowed to be put by the Chair. It was discussed in the House, and commitments were definitely made by the Government of the day. I am the one to know. However I will not press it any further. I see the difficulties.
I want to know from the Government if they can give any undertaking in line with that which was given in the last Parliament in view of the removal of Regulation 55B. There is no protection accorded to the House and no protection accorded to the general public in this matter. There might be on the part of the powerful liquor trade an attempt to deal with this question with committees behind closed doors. There might be tremendous pressure, on the one hand, to get an increase of licences, and, on the other, an increase of facilities, by giving the Excise Department power to extend bottle shops and other drinking institutions of that kind. We cannot let recon-

struction authorities be without some sort of protection in that sort of matter. I hope that the Under-Secretary of State for the Home Department or the Solicitor-General will be able to say what the Government propose to do about that matter, and be at least as good as the last Government in the matter.
There are many of us in this House who are aware that we are confronted all the time on questions of this sort by an extremely powerful capitalist organisation that will ride roughshod, if we allow it, over all the organisation that we build up in connection with planning authorities or any other sort of authority. Unless we exercise watchfulness on questions of this sort, the public will be fleeced of many rights which today they enjoy. It is with that in mind that I have made my protest.

2.7 p.m.

Mr. Oliver: I would draw the hon. Gentleman's attention to the fact that the Bill that it has been my pleasure to introduce today consists of four Clauses only, not one of which deals with the matter that he has been discussing. There is nothing in the proposals whatsoever which minimises the rights which objectors now have. Nothing which this Bill does or seeks to do minimises those rights. If there are the rights which my hon. Friend says there are to lodge objections, then this Bill does not affect them. Objections may be sustained and may be proceeded with. With regard to the sub-committees, there is no reason in the world why the people who compose the sub-committees should be less experienced than any other persons, but as the object of the sub-committees is not to grant licences, the points he has raised do not arise.
Question put, and agreed to.
Bill accordingly read a Second time.
Bill committed to a Committee of the Whole House for Monday next.—[Mr. Joseph Henderson.]

Orders of the Day — STATUTORY RULES AND ORDERS, &c.

Colonel Sir Charles MacAndrew (): I beg to move,
That the Order of Reference [23rd August] to the Select Committee, as amended by Order [6th November], be read, and further amended


in line 4 by inserting, after the word 'be', the words 'or might have been.'
The object of this Motion is to enable the Select Committee on Statutory Rules and Orders to draw the attention of the House to corrected reprints in cases where the time for praying against the original Order has elapsed. It is to bring our procedure into line with Mr. Speaker's Ruling of last Wednesday.

Captain Crowder (): I beg to second the Motion.

The Financial Secretary to the Treasury (): On behalf of the Government I have great pleasure in accepting this change. Clearly, this power

should reside in this particular Committee. If I may, I should like to congratulate the hon. and gallant Gentleman on the phrasing of the Amendment. I understand it has been accepted by the Parliamentary draftsmen. It is short, clear, and to the point.
Question put, and agreed to.

Orders of the Day — ADJOURNMENT

Resolved: "That this House do now adjourn."—[Mr. Joseph Henderson.]

Adjourned accordingly at Ten Minutes past Two o'Clock.